The single feature most characteristic of rheumatoid arthritis is massive expansion of the synovium with local invasion and destruction of bone and cartilage. Histologically, this disease process resembles a mesenchymal neoplasm in that the sites of bone invasion are composed of transformed-appearing fibroblastlike cells and new blood vessels. This process is clearly driven by the immune and inflammatory systems, but the detailed mechanisms are not understood. We have shown that the fibroblastlike cells are, indeed, tumorlike in that they express high levels of transin, MYC and SIS in vivo, and grow in vitro like tumor cells. They grow rapidly, do not contact inhibit, grow to high saturation densities, and grow under anchorage-independent conditions. These abnormal properties are suppressed by the differentiating agent, retinoic acid, and by transforming growth factor beta (TGF-beta)- The cells also lose their abnormal properties on passage in culture, i.e., the abnormal phenotype is reversible. Normal synovial cells can be induced to exhibit the abnormal phenotype by stimulation with platelet derived growth factor (PDGF). We have demonstrated PDGF and TGF-beta in rheumatoid synovial fluids and tissues. In other studies, we have shown that the peripheral blood of rheumatoid patients have a markedly expanded population of CD5+ B cells which make both monoreactive and polyreactive rheumatoid factors.